WASHINGTON: US lawmakers struggled yesterday to find a compromise on a proposed financial rescue package, amid deep skepticism from some and fears that a lack of action could trigger a financial market calamity.
The massive proposal for a $700-billion aid plan faced a second day of fierce debate on Capitol Hill amid objections from some lawmakers on the size and scope of the package, as well as insistence on stronger government oversight and consumer protection.
Appearing before the Joint Economic Committee of Congress, Federal Reserve chairman Ben Bernanke urged lawmakers “to act quickly to address the grave threats to financial stability that we currently face.”
Bernanke said the economy cannot recover without a “return to more normal functioning” of the financial system to allow credit to flow and some improvement in the housing sector. “Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy,” he said.
President George W. Bush acknowledged bitter debate in the US Congress but predicted a strong package.
Bush said he expected “ample debate,” but added: “I am confident that when it is all said and done, there will be a robust plan. And there needs to be.”
But many US lawmakers were digging in their heels, refusing to provide the Republican administration with a blank check to buy up troubled assets.
Leaders of both parties scrambled to come up with a compromise that would help restore confidence in fragile financial markets, which have been in turmoil since the bankruptcy of Lehman Brothers and an $85 billion aid package for insurance and financial giant AIG last week.
House of Representatives Financial Services Committee chairman Barney Frank said he believed it was possible to craft a plan that would pass.
“There are some people who I think are trying to derail it, but there are a lot of people who honestly want to make this work,” he said.
House Republican leader John Boehner said, “It’s the size of the solution that causes great concern, and (lawmakers are) trying to gauge the risk-to-reward ratio.”
“We’ve got to get this right,” Senate Banking Committee Chairman Christopher Dodd said after chairing a hearing Tuesday with Bernanke and Treasury Secretary Henry Paulson. “There is no second act.”
Senate Republican leader Mitch McConnell added, “We’re anxious to act quickly.”
